Perpetual seeks reform of Soul Patts, Brickworks

Perpetual head of equities
Matthew Williams
has called on the independent directors of
Washington H Soul Pattinson
and its cross-shareholding partner,
Brickworks
, to form a separate committee to assess restructuring proposals.

His comments follow a shareholder letter from the Brickworks board that labelled restructuring proposals from Perpetual and activist
Mark Carnegie
“fundamentally flawed" adding it would not assess any further proposals unless it could be proven the proposal was better than the current structure.

CIMB analyst Roger Leaning said combining the independent directors of both companies could have a number of legal implications. “All the legal implications could be discussed and negotiated but I think there might be a lot of challenges that would prevent it. It could come unstuck – will some conflict arise where a transaction looks good for one group of shareholders and not the others?" he said.

In an opinion piece, Mr Williams says the “circular nature" of the cross-ownership structure, in which Brickworks owns about 43 per cent of Soul Patts and the investment conglomerate owns around 45 per cent of the brick company, meant a unique approach was needed to assess the options.

Perpetual owns about 12 per cent of both companies and has long argued the cross-shareholding relationship conceals the true value of both companies. Mr Carnegie emerged with a $30 million option over the fund manager’s stock in both companies in November.

Soul Patts could not be reached for comment and Brickworks refused to comment.